Pandemic reveals flaws in global supply chain
Recently, the U.S. Senate investigated America’s heavy reliance on China for key medicines and pharmaceutical ingredients.
This is now a pressing issue, since the coronavirus pandemic has revealed troubling vulnerabilities in America’s globalized supply chains. In fact, the United States relies on China for a vast array of resources-everything from surgical supplies and medical equipment to military hardware and rare earth metals. And many of these imports are now on hold, since the coronavirus has halted production in China.
Particularly disturbing is that Beijing sees the coronavirus as an opportunity to exploit a strategic advantage. Party officials in China are already looking to “turn crisis into opportunity.” Horizon Advisory reports that Beijing hopes the pandemic can “reverse any progress that the U.S. has made in countering China’s co-option of global industry.”
All of this highlights a greater problem: America’s overwhelming dependence on imports to supply resources needed in everyday life. In response, the White House is considering a large-scale effort to ramp up domestic manufacturing of key medical equipment, especially in light of China halting exports of face masks. That’s a good first step. But there are a variety of critical sectors that must also be restored in a timely manner.
Earlier this month, a Senate hearing investigated potential shortages of drugs sourced only from China. Right now, generic medications comprise 90 percent of America’s daily pharmaceutical needs. However, many of these drugs are made with compounds and ingredients produced only in China. In particular, 90 percent of the ingredients necessary for medications used to treat coronavirus infections are sourced only from China. The three standard antibiotics used to treat coronavirus and related infections-azithromycin, ciprofloxacin, and piperacillin-also require ingredients made in China. And even common household medicines like ibuprofen and acetaminophen are overwhelmingly supplied by China.
Equally urgent is the need to ramp up domestic production of metals and minerals for which the U.S. is heavily reliant on China and other nations. Almost every product used today-whether it’s a cell phone, computer, or medical device-incorporates dozens of important metals and minerals. These range from common metals like gold, silver, copper, and platinum to more exotic minerals like gallium, germanium, indium, tantalum. There are also rare earth metals like lanthanum, neodymium, and dysprosium needed to manufacture everything from computers and cell phones to wind turbines and electric vehicle batteries.
At present, the United States is heavily dependent on other nations to supply these metals and minerals. This reliance has nearly doubled over the past two decades, and no country controls supplies more than China. The U.S. Geological Survey reports that China continues to “dominate” the global supply of rare earths, providing 80 percent of the rare earth metals used in the United States.
Ironically, the United States is home to vast, untapped geologic deposits worth an estimated $6.2 trillion. The U.S. should develop its own mineral and metal supply chains through smart, safe environmental practices. That could limit Beijing’s strategic dominance-particularly when China’s practices include forced labor and a disregard for environmental standards.
The coronavirus underscores that the United States is heavily dependent on overseas supply chains. When these global sources are disrupted by a pandemic or other unforeseen circumstances, the U.S. is placed in a precarious position.
It’s time to focus on reshoring industries beyond just medicine. Localizing America’s supply chains is good for health, job creation, innovation, and national security. Reducing America’s dependence on China, and reinvigorating U.S. industry to produce everything from face masks to critical minerals, is an essential step to creating a stronger and more resilient economy as we emerge from the coronavirus recession.
Michael Stumo is CEO of the Coalition for a Prosperous America (CPA). Follow him at @michael_stumo